Nickel-Cobalt

NORNICO 

Metallica’s flagship project is the 100% owned NORNICO Nickel-Cobalt Project 32 kilometres south of Mt Garnet in northern Queensland, where the Company aims to develop a profitable long-life mine, producing an estimated 10,000 tonnes of high-grade nickel and 1,000 tonnes of cobalt each year for at least 15 years.

The NORNICO Project enjoys excellent access to roads and transport infrastructure, including port facilities just 140 kilometres away by road.

The NORNICO Feasibility Study was deferred in March 2009 to enable further drilling on the cobalt rich Kokomo nickel deposit to expand and enhance the resource base, complete metallurgical studies, and progress the development of the the process flow sheet to maximise metal recoveries and economic efficiency.

The current preferred development option going forward is for a 1 million tonne per annum (mtpa) project with an on-site processing plant and an acid-power plant, based primarily on heated agitated atmospheric acid leach and solvent extraction/electrowinning, to produce ~ 10,000 tpa of nickel metal and > 1,000 tpa of cobalt sulphide.

NORNICO nickel ores are highly amenable to dilute acid leaching for nickel and cobalt extraction. The combined NORNICO resource base of the three deposits of Bell Creek, Minnamoolka and Kokomo is approximately 50 million tonnes @ 0.72% Ni and 0.06% Co (364 Kt Ni and 29 Kt Co contained). This resource base will be further enhanced after the completion of an additional 300 holes on Kokomo Project in September, with revised NORNICO resource estimate expected in late October.

(For further information see ASX release dated 19 January 2009).
 

Lucky Break

The Lucky Break Nickel Project, 140 kilometres west of Townsville, is a joint venture between Metals Finance Corporation (ASX: ‘MFC’) and Metallica. MFC is the project manager, responsible for all development costs as part of its earn-in agreement. Metallica is free carried and will receive a share of the operating surplus once the project is in operation – initially 15%, until MFC has recouped its capital investment, and 60% thereafter.

Lucky Break will be brought into nickel production at no additional cost to Metallica and hence does not dilute shareholder equity. It will also provide Metallica with invaluable operational experience and know-how, ahead of the much larger scale NORNICO start-up.

Following a comprehensive MFC pilot program and an independent feasibility study confirming the project’s technical and financial viability, MFC and Metallica decided in June 2007 to progress towards implementation of the project. Development was subsequently delayed due to issues with acid supply and uncertainties associated with the global downturn.

MFC has subsequently completed a detailed project review and internal feasibility study, which confirm more robust prospects for the project under current market conditions, including a significant reduction in acid consumption, significantly lower capital costs, and higher potential revenues through a higher grade product.

MFC is currently updating capital and operating costs and other related studies, with a view to finalising a Definitive Feasibility Study on the revised project by the end of 2009. Proposed nickel production is expected to be in the order of 700-1,200 tonnes per annum, with targeted development of the project recommencing early 2010.